Why Furniture Recommerce?

Interview with Chris Richter

Furniture recommerce can be a next big thing for furniture retailers who want to tell sustainable stories, acquire new customers and add income from returned items.

Although eBay claims on its website that it “pioneered recommerce, the buying and selling of pre‑owned goods,” the practice is almost as old as commerce itself. The used car and antiques market, garage sales and thrift stores all come to mind. And although it’s not a new idea, it has become an interesting and timely trend. A recent report out of Wharton/First Insight found that 83% of consumers across all generations will continue to purchase secondhand products compared to only 17% in 2019. Projections are that U.S. resale is set to grow more than 150 percent to top $330 billion by 2030.

Furniture World spoke about recommerce with Chris Richter, who along with Ryan Matthews, founded FloorFound, a company that provides a way for furniture retailers to resell returned or used furniture to consumers.

Building Trust, Making it Easy

Before launching the company, Richter, who has a background in e-commerce and supply chain logistics, was paying attention to new online resale marketplaces for furniture, fashion and home furnishings that matched buyers and sellers. “These,” he said, “included Poshmark (poshmark.com) and The RealReal (therealreal.com) in the luxury resale space, as well as Chairish (chairish.com) and 1stdibs (1stdibs.com) reselling furniture and home décor.

“This group of fast-growing companies,” he continued, “were really crushing it by catering to consumers looking for unique items and cared deeply about sustainability.” They offered trusted ways to resell items, including bulky furniture, that might have previously been offered for sale on eBay or Craigslist where users were responsible for all the details of making the sale, packaging, arranging for delivery and insurance.

“Visiting furniture stores in my home city, Austin, Texas,” he continued, “I noticed that floor models were being marked down in a store-specific way without any rhyme or reason. So, my question was, might there be a way for me to see all the floor model returns from a retailer like Restoration Hardware without visiting their stores all over the country?”

Problems with Returns

“At the same time,” he added, “click and brick furniture retailers were getting tens or even hundreds of thousands of returns per year. Bringing back and reselling all these items in clearance centers was problematic, especially when reverse logistics were impractical. Ryan and I realized that this problem could be solved with a solid recommerce strategy for returns that generates revenue, facilitates new customer acquisition and achieves other business goals.”

How FloorFound Works

Richter explained the process. “Let’s say that a customer who lives somewhere in California buys a sofa from an e-commerce website, like Crate&Barrel.

“Upon receiving the item, this customer decides to return it and calls the retailer’s customer care line.

“It turns out that the nearest distribution center is too far away from where the item can be returned to, so the retailer first offers the customer a discount to keep the item. If the customer refuses, they may let them keep it for free or offer to haul it off to a landfill rather than repairing and restocking it.

“As an alternative, FloorFound developed a return logistics model that takes the request, arranges for pick up via LTL, and brings the item back to one of 42 warehouse locations or to be retrieved by a third-party logistics provider and taken to one of their last-mile hubs.

“Software is then used to run an inspection process to determine what, if anything, is wrong with the item. It could be missing a leg, or have a scratch, ding, dent or a tear. Items are then priced for resale and listed online.

“For us, there are a few different ways we can sell returned items. Our client, Living Spaces, for example, lists returns that aren’t economical to bring back for in-store resale on a branded Living Spaces site hosted and managed by FloorFound. One benefit of reselling on a branded channel is new customer acquisition of people who prefer recommerce, not just because they get a good deal, but also because they believe in the virtue of keeping furniture out of landfills.

“Ninety-five percent of the items we get back are perfectly good and perfectly resellable?. Presently we do light refurbishment but plan to scale up repair and refurb over the next couple of years.”

Why Don’t More Furniture Retailers Do Recommerce?

Furniture World asked Richter why more furniture retailers haven’t jumped on the recommerce model. He replied, “Sustainability and regenerative commerce are trending topics that are not going to fade away. Eventually, just about every furniture retailer will have to get onboard in some form or another.

It makes sense for retailers to start to think about the full lifetime value potential of a piece of furniture that starts with an initial sale and continues through subsequent sales in the second quality and used marketplace.”

The largest percentage of retail brands that have adopted recommerce do at least 15 to 30 percent of their volume via e-commerce. They are committed to sustainable practices and understand that their customers will respond positively to this program.

“There are lots of other retailers, however, who are afraid of how branded resale efforts might affect the perception of their brand or concerned that the practice might cannibalize their sales of new furniture.

“The experience of Floyd (West Elm, Pottery Barn, etc.) tells a different story. Floyd found that roughly 25 percent of first-time shoppers that bought their recommerce offerings came back and purchased a new item within 30 days. These were primarily customers who hadn’t purchased from their brand before. Recommerce turned out to be an excellent opportunity for them to sell to a new kind of customer and build brand loyalty.”

IKEA Jumps In

IKEA recently announced the extension of the pilot Buy Back & Resell service would become permanent. That program permits “IKEA Family Members” to sell their gently used IKEA furniture back to IKEA in exchange for store credit. Items will be sold in “As Is” areas of IKEA stores. Although FloorFound is designed to handle returns, it’s easy to imagine a similar model where higher-end used furniture could be repurchased by a retailer or used as a trade-in on previously purchased goods with certain conditions.

“IKEA has become the poster child for this idea,” Richter noted. “A model like this could be similar to what car dealerships do when they reach out to customers to buy back cars for resale. Taking back a used car creates a recommerce opportunity and helps to sell a previous customer a new car.”

Standing Behind What We Sell

Furniture World asked Richter if furniture recommerce might breathe new life into the old sales adage that if you buy a quality piece of furniture it will last a lifetime.

“There is value in the idea that retailers stand behind what they sell,” Richter agreed. “It makes sense,” he observed, “for them to think about the full lifetime value potential of a piece of furniture, that starts with an initial sale and continues through subsequent sales in the second quality and used marketplace. It’s the start of a circular economy proposition that increasingly makes sense.

“I believe that once larger players follow the lead of IKEA and others who become established in the recommerce furniture market, the threat will become obvious to late adopters who lose an additional portion of the sales pie. Every home furnishings retailer will eventually have to onboard a version of a program like this, if only as a defensive move.”

A Few Positioning Ideas

In closing, Richter suggested a few ideas furniture retailers might use to integrate recommerce programs into their operations.

• The Story: This is not always a typical clearance or outlet type of sales story, so retailers need to come up with different branding positions, such as, “Refresh, Renew or New to You!” Some story excerpts from FloorFound client recommerce sites are:

  Feather: “Welcome to our Garage Sale! Get savings of 40% or more on favorite retired pieces. Find dressers, sofas, decor, & more.”

  Burrow: “Here we offer a great deal on our open-box, returned, refurbished inventory – all of which ships quickly and straight to your door.”

  EQ3: "ReHome allows us to find new homes for gently used pieces and returns, helping us keep our designs in circulation and out of landfills. Here, you’ll find timeless pieces to bring into your home at up to 50% off, so you can feel good knowing you’re doing right by our planet and your space.”

  Mitchel Gold + Bob Williams: Give our heirloom-quality, handcrafted furniture a new home and get a great deal in the process with our open box collection. These pieces may be gently lived-in or spent some time on our showroom floors—but we build our furniture to last.” Modsy: “Modsy’s returned and imperfect furniture at up to 60% off! These pieces might have a few blemishes (think: a scratch here or a chipped edge there), but they’re perfectly functional.”

• Save the Sale: Let’s say a customer making an in-store visit decides that they want to purchase a dining room set they see on the floor. They say they are moving into a new house in a couple of weeks. The floor sample is nailed down and it will likely take nine to 12 weeks to get new stock. Why not offer that same item located in resale inventory that can be drop-shipped? It’s a way to potentially save a lost sale.

• Advanced Segmentation: For those retailers who have a 360-degree profile of their shoppers, recommerce is an opportunity to target segments that will be open to purchasing second quality merchandise or re-approach certain shoppers who fail to return to make a purchase.

Conclusion

Although recommerce isn’t top of mind for many furniture retailers, it should be. “New resale models represent an important growth opportunity for oversized retailers and brand manufacturers,“ said Chris Richter. “So far, consumers are very receptive to resale but largely unaware of full-scale recommerce programs. Retailers and brands can, and should, act to implement and promote recommerce initiatives to take market share, increase revenue, and do their part in protecting the planet.”